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Skill Asymmetries, Increasing Wage Inequality and Unemployment

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  • Paul Auerbach
  • Peter Skott

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

Using a simple model with two levels of skill, we assume that high-skill workers who fail to get high-skill jobs may accept low-skill positions; low-skill workers do not have the analogous option of filling high-skill positions. This asymmetry implies that a slowdown in Hicks-neutral technical change (or other adverse, skill-neutral shocks) may cause an increase in wage inequality, both between and within skill categories, as well as an increase in unemployment, especially among low-skill workers. Movements in productivity, unemployment and inequality may thus be linked to induced overeducation and credentialism.

Suggested Citation

  • Paul Auerbach & Peter Skott, "undated". "Skill Asymmetries, Increasing Wage Inequality and Unemployment," Economics Working Papers 2000-18, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2000-18
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    References listed on IDEAS

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    Cited by:

    1. Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July.
    2. Effrosyni Diamantoudi, 2003. "Equilibrium binding agreements under diverse behavioral assumptions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 431-446, September.
    3. Muysken, Joan & Hoppe, Mombert & Rieder, Hannah, 2002. "The Impact of education and mismatch on wages: Germany, 1984-2000," Research Memorandum 041, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    4. Skott, Peter & Auerbach, Paul, 2003. "Wage inequality and skill asymmetries," Economics Discussion Papers 2003-7, School of Economics, Kingston University London.
    5. Muysken, Joan & Weissbrich, Andrea & Restorff, Claus-Henning von, 2002. "The impact of education and mismatch on wages: the USA, 1986-1996," Research Memorandum 017, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    6. Alain Alcouffe & Jean-Michel Plassard, 2013. "Abondance d'éducation peut -elle nuire ? Une histoire des théories de économiques de la sur-éducation," Working Papers halshs-00827251, HAL.

    More about this item

    Keywords

    Wage inequality; unemployment; skill-bias; Hicks-neutral technical change; overeducation; credentialism;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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